University of Debrecen Research: ASEAN Economic Integration Challenges

This research paper, focusing on the Association of Southeast Asian Nations (ASEAN), examines the benefits, challenges, and potential solutions related to regional economic integration. The study, based on secondary data and qualitative analysis, explores ASEAN's economic growth, trade practices, and the impact of government policies. The paper investigates challenges such as unstable regional relationships, inefficient business governance, and income diversity. It also explores the impact of these challenges on the growth and sustainability of the region. The research aims to identify strategies for overcoming these challenges and improving ASEAN's economic performance, offering valuable insights for businesses and academics alike. The study includes an introduction to regional economic integration, an extensive literature review, a detailed methodology section, data analysis, and findings, leading to conclusions and recommendations for future research.

Running head: RESEARCH PAPER
Research study on: "Challenges of Regional economic integration and potential solutions:
A case study of ASEAN"
Name of the Student:
Name of the University:
Author note:

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Acknowledgement
I am thankful to all the people for their guidance and thorough support that made it possible for
me to perform this research work. Their support and belief had made me realize my true strength
and potential. This has made me implement all my qualities in the research study in its best
possible manner. Firstly, I would like to thank my guide for his continuous and uninterrupted
guidance. This has contributed to my prominent knowledge and helped me in completing my
work on time. Additionally I would also like to appreciate the unconditional devotion that he has
conferred upon my work and me. This has kept me grounded and made my personality better.
Moreover, I would also like to express my gratitude towards all the participants who devoted
their valuable time in my study. Lastly, I would express my appreciation for my family and
friends who supported me throughout and encouraged my ability to complete the research work
successfully.

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Abstract
Economic integration among the countries are an agreed and planned economic cooperation that
contributes to the overall development and progress of the countries within the particular region.
This provides benefits to the member nations by boosting their trade and productivity. This
creation of trade is possible through the elimination of tariffs and other trade restrictions. Over
the years, regional economic integration has provide support to new trading economies and
helped open their market. This research paper focuses on the benefits, challenges and potentiality
in improvement of the regional economic integration. Moreover, this study is based on the case
study of ASEAN (Association of Southeast Asian Nation). This research is done on the basis of
secondary data and qualitative analysis with a descriptive framework. In addition to this, the
evidences are validated with traditional and established theories to support the assumptions.
From the data derived from sources, it is seen that ASEAN has recorded prominent levels of
growth and development. Trade practices are not subject to severe challenges yet requires
government intervention. The continuous expansion in the region has adverse impact on the
growth. However, the government is working on its policies to recover the areas.

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Table of Contents
CHAPTER 1: INTRODUCTION....................................................................................................5
1.1 Introduction............................................................................................................................5
1.2 ASEAN and its context in the study......................................................................................6
1.3 Research aim and objectives..................................................................................................8
1.4 Research questions.................................................................................................................8
1.5 Significance of the study.......................................................................................................9
1.6 Structure of research..............................................................................................................9
CHAPTER 2: LITERATURE REVIEW.......................................................................................11
2.1 Regional economic integration and its benefits...................................................................11
2.2 Drawbacks and Challenges faced by Regional Economic Integration................................14
2.3 Success of the Association of Southeast Asian Nations (ASEAN).....................................16
2.4 Research Gap.......................................................................................................................18
CHAPTER 3: METHODLOGY....................................................................................................19
3.1 Research Philosophy............................................................................................................19
3.2 Research Approach..............................................................................................................20
3.3 Research Purpose.................................................................................................................21
3.4 Research Design..................................................................................................................21
3.5 Research Strategy................................................................................................................22
3.6 Method for Collection of Data.............................................................................................23

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3.7 Data Analysis Method.........................................................................................................23
3.8 Ethical Consideration...........................................................................................................24
CHAPTER 4: DATA ANALYSIS AND FINDINGS...................................................................25
4.1 Findings...............................................................................................................................25
4.1.1 GDP and economic growth...........................................................................................25
4.1.2 Trade and investment....................................................................................................30
4.2 Issues in ASEAN.................................................................................................................33
4.3 Challenges that need to be addressed by ASEAN...............................................................36
CHAPTER 5: CONCLUSION AND RECOMMENDATIONS...................................................40
5.1 Linking to the objectives.....................................................................................................40
5.1.1 Linking to the first objective.........................................................................................40
5.1.2 Linking to the second objective....................................................................................41
5.2 Recommendations................................................................................................................42
5.3 Future scope of the study.....................................................................................................43
References......................................................................................................................................45

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CHAPTER 1: INTRODUCTION
1.1 Introduction
Regional Economic Integration (REI) refers to the strategic economic cooperation among
the countries of specific geographic regions of the world for the purpose of achieving an overall
development of those countries and the entire region (Ottaviano, 2016). Thus, the regional
economic integration includes the economic aspects of free trade, customs union, preferential
trade access for the members, common market place, and economic union for the countries that
opt for the integration. As highlighted by Mukherjee (2019), the REI consists of economic and
political agreements between the nations of a particular geographic region for reducing and
finally eliminating the tariffs and the non-tariff barriers to trade of products, services and various
resources and factors of production among themselves. The REIs are seen as the attempts for
achieving the gains from free flow of trade in goods, services and resources for production and
investment in the countries, which are not fully attainable under the WTO agreements. The
argument for establishing a regional integration is that it is easier to create a regime with free
trade and investments in a small region, and among few countries due to their
adjacency/proximity and easier access to the market places. If the number of countries is large,
then there would be more perspectives for reconciliation, which would make the path to reach
agreements harder (Brown, Dar‐Brodeur & Tweedle, 2019). The REIs are also referred to as the
regional trade block, regional grouping and regional economic forces. There are quite a few REIs
in the world, such as, the European Union (EU), North American Free Trade Agreement
(NAFTA), Asia Pacific Economic Cooperation (APEC), Association of South East Asian

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Nations (ASEAN), Central European Free Trade Agreement (CEFTA) and South Asian
Association for Regional Cooperation (SAARC) (Gibb, 2017).
As there are many benefits of REIs, there are also some crucial challenges. Volatility in
the exchange rates, fluctuations in the currency values, disparities in the level of economic
growth among the member countries, increased level of trade diversion, shifts as well as
reductions in employment level cross the region and loss of the national sovereignty are some of
the important challenges of these type of economic integration (De Lombaerde, Acosta & De
Lombaerde, 2017). At the same time, different economically integrated regions have issues of
different nature, which requires specific measures to overcome the challenges. It happens mainly
due to different levels of economic development and difference in investment in different regions
(Menon & Fink, 2019). The needs of the countries also differ that calls for different measures.
Thus, this research study will focus on a particular REI, ASEAN, to explore the challenges of the
REI and to find out the potential solutions.
1.2 ASEAN and its context in the study
ASEAN stands for Association of Southeast Asian Nations. ASEAN is the
intergovernmental organization formed with an aim to promote the economic growth as well as
political and regional stability among the member countries. Thus, ASEAN is also considered as
a Regional Economic Integration among the Southeast Asian countries. It consists of 10 member
states, namely, Indonesia, Philippines, Malaysia, Singapore, Brunei, Thailand, Laos, Vietnam,
Myanmar, and Cambodia (Wood, 2017).

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The plan for establishing an integrated community of the Asian countries was set up in
1967 with only 5 countries, Indonesia, Philippines, Thailand, Singapore and Malaysia. Over
time, the other 5 countries joined to make the number of members to 10. As found from the
website of ASEAN, the fundamentals of the origin of ASEAN is to encourage economic and
political cooperation and collaboration among the member countries, which includes the interests
regarding the growth of trade of goods and services and important resources. ASEAN has
promoted a free trade agreement among the member countries along with China. It also opened
up easy travelling for the citizens of the member nations in that particular region (asean.org,
2019). The REI also aimed to achieve stability and peace in that region through a treaty signed
by the member countries to not develop the nuclear weapons, to establish a pact for counter-
terrorism through the sharing of intelligence and encouraging the process of extradition of the
terror suspects (Wood, 2017). Apart from these, the REI also works for achieving sustainability
and conservation of the biodiversity. ASEAN has achieved success economically. In 2017, the
combined GDP of the region was $2.77 trillion and it is expected to the fourth biggest combined
economy by 2050 (Mahmood, 2018).
However, apart from the benefits and success of ASEAN, the region also face certain
challenges that affect its benefits and agendas, which also affect the growth of the member
countries. As highlighted by Mahmood (2018), there are few aspects predicted that could
challenge the sustainable growth of the member economies. The unstable regional relationships,
inefficient business governance for different types of businesses, emergence of many new type of
businesses, facing tough competition from large competitors, changing demographics with
continuously evolving demands, increasing migration putting pressure on the job market, wide

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income diversity and lack of infrastructure for efficient adoption and implementation of
advanced technology are some of the very crucial challenges of ASEAN (Mahmood, 2018).
Thus, it can be said that there are quite a few significant issues in ASEAN that are
affecting the inclusive and sustainable growth of the member countries in relation to the global
growth. It can also be said that the different REIs in the world face variety of challenges, which
limit their aim of sustainability and inclusive growth. Through this research, the ASEAN and its
challenges will be explored to find out their impact on the growth level and sustainability of the
resources of the entire region. The desired outcome of the study aims to include potential
solutions to overcome the challenges of REI, with a special focus on the ASEAN.
1.3 Aim and objectives of the research
The aim of the study is to explore and evaluate the challenges of the economic
integration of ASEAN to find out the possible solutions to address those challenges in an
efficient manner.
The research objectives are:
 To explore the effectiveness of the regional integration of ASEAN
 To investigate the challenges faced by ASEAN members
 To reflect on the potential solutions that can address the challenges of ASEAN
1.4 Research questions
The research questions are:

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1) What are the benefits and drawbacks of the REI of ASEAN in relation to the global
economic performance?
2) What are the challenges faced by ASEAN and to what extent those challenges are
affecting the performance of the economic integration?
3) What are the potential solutions that can be used to overcome the challenges of ASEAN
to improve the member countries’ economic performance?
1.5 Significance of the study
As stated earlier, the research study is aimed at exploring the benefits and costs of the
regional economic integration in the context of ASEAN and evaluating the potential solutions to
overcome those challenges to improve the economic performance and growth of the countries.
This outcome would benefit the businesses to focus on the areas of growth and improve
performances as per the relevant potentiality to overcome the challenges of the particular region
by taking appropriate measures in relation to the type of businesses. The study also has another
academic implication. The findings from the research would enhance the academics containing
various aspects of the regional economic integration and the role and performance of ASEAN.
1.6 Structure of the study
 Chapter 1 presents the introduction on the research topic. This chapter contains the aim
and objectives of research, research questions, background of the study, context of the
case study, and significance of the research. It is helpful in presenting an overview of the
research study.
 In chapter 2, an extensive literature review is presented. This chapter is beneficial to
create a context of the study by highlighting the findings of the previous studies in

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relation to the research problem. It also helps in identifying the literature gap, which is
expected to be filled up by the findings of the present research.
 Chapter 3 contains research methodology. It illustrates the steps and strategies that are
undertaken to address the research questions. It consists of research philosophy, research
purpose, design, approach, strategy, and procedures of collection and analysis of data.
 In chapter 4, the data analysis, findings and their interpretation are provided. This chapter
illustrates the findings from data analysis, collected by applying appropriate methods.
Various tables and charts are provided for graphical representation of the findings.
 Chapter 5 is the last chapter illustrating the conclusion and recommendations based on
the findings of the study. In this chapter, the researcher establishes a connection between
the research objectives and findings. On the basis of the findings, some recommendations
are provided to address the research problems in an efficient manner. Limitation and
future scope of the study are also presented in this chapter.

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CHAPTER 2: LITERATURE REVIEW
This chapter presents a comprehensive and extensive discussion on literatures on the
regional economic integration, its different aspects and the facets of ASEAN. The purpose of this
chapter is to illustrate the context of the research study in a detailed manner to make the readers
acquainted with the research subject. This chapter also highlights the aspects of the subject that
had been previously explored by the scholars, which is beneficial to identify the literature gap for
this research study.
2.1 Regional economic integration and its benefits
The concept of regional economic integration is based on the theory of economic
integration. As stated by Balassa (2013), economic integration refers to the agreement among
few nations that mainly aims to eliminate the trade as well as non-trade barriers among the
countries to facilitate the free flow of resources and goods and services to promote economic
growth of the member countries and also to establish the collaboration of the monetary and fiscal
policies. The author also highlighted the most common forms of economic integration, namely,
area of free trade, common market, economic union or single market, customs union, and the
total integration. Thus, economic integration not only focuses on the aspects related to the
economics only, but it also incorporates various political and social aspects to cover the overall
growth prospective of the countries. Hence, the concept of economic integration deals with its
different forms, benefits and also the problems that arise from the divergences in the monetary,
fiscal and all other types of governmental policies.
Haftel (2013) mentioned that the present economically integrated organization are highly
diverse. While some organizations handle many economic issues, the other organizations have

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some limited mandates, and some have a system of independent bureaucracy along with a
legalized dispute settlement mechanism (DSM). Since, the economic integration deals with
various types of institutions, the complicacy of commerce and other economic relationships
among the institutions affect the growth of the region significantly. Thus, while assessing the
impact of a regional economic integration, the nature and functionalities of the different
institutions must be evaluated. In this context, the study by Tumwebaze & Ijjo (2015) on the REI
in the COMESA region can be mentioned. The authors highlighted that in the COMESA region
(Common Market for Eastern and Southern Africa), the framework of the cross-country growth
model was evaluated using quantitative method and no empirical support from the regional
integration was found that can push the regional growth, however, the authors found that the
level of world GDP, the stock of capital and the trade openness combined with the different
types of institutions pushed the growth and development of the COMESA region. The nature or
structure of different types of organizations is therefore important to utilize the growth drivers
such as the investment level in that particular region. Otherwise the resource allocation becomes
inefficient and wasted.
Hosny (2013) explored the theories of economic integration to get an overview of the
impact of those on the specific regions. He found that the initial tariff rates, the volume of the
foreign trade as a proportion of GDP, transport cost, coordination among the macroeconomic
policies, are some of the highly important determinants that affect the desirability of the
economic integrations. At the same time, political integration is also important for achieving the
maximum benefits of regional integration.
Moreover, economic integration provides good growth to the member countries. It states
that over the years these integrations have provided the member nations with high gains from

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trade. These integrations provide wide range of opportunities for growing industries as well as
for the well-established manufacturers. This even provides wider markets to these industries of
the member countries. This introduces the domestic producers in the global platform and ignites
their level of confidence in the business. Altogether, this generates revenue for the member
countries (Krapohl & Fink, 2013). Additionally, this creates economies of scale among the
manufacturers. These are likely to occur when diverse industries integrate with different
members. There is huge amount of trade operations due to elimination of trade barriers like
tariffs and quotas. This creates trade in the region. The internal free trade induces the member
countries to drop their external tariff rates and improve the terms of trade of the world. This leads
to a rise in welfare of the global market (Bond, Riezman & Syropoulos, 2013). Thus, the
economic integration provides benefits globally. This further increases the domestic level of
production and reduces the cost of production for the manufactures of merchandise products.
Moreover, the rate of investment increases and there is huge amount of cash inflows into the
country. This helps in boosting the confidence of the business sector of the economic integration
(Aizenman, Jinjarak & Park, 2013). This clarifies the fact that when countries economically
integrate among each other through elimination of trade barriers this benefits both the producers
and the market.
As per Wang (2014) the economic integration in Central Asia have increased the growth
rate of the exporting sector. This integration has helped this region to build a strong connection
with the world market. Though there are hurdles from the governments of Central Asia countries,
yet the region has accomplished and recorded good rates of growth. According to Volz (2013),
the regional economic integration has transformed the Association of Southeast Asian Nations
(ASEAN) to financial integration. This integration has transformed the member nations into an

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economically efficient trader. Over the years, it has been noted that the inward-looking policies
has helped the member nations to become the fastest growing modern nations. The growth of the
ASEAN integration is an export-oriented growth that is the reason behind the development of
this region. Countries like Singapore and Hong Kong are economically well developed. This
countries act as a magnetic field for business and commerce.
2.2 Drawbacks and Challenges faced by Regional Economic Integration
In a regional economic integration, there is a trade liberalization treaty signed
among member countries that incorporates agreement that aims to abolish tariffs and restrictive
trade policies (Tongzon & Lee, 2015). This encourage trade practices among the member nations
and strengthen their economies. Additionally it motivates the business and investment in the
member countries that boosts productivity and growth level of the nations. Higher amounts of
trade implies greater production and export that generates revenue for the entire region. Apart
from adding to the domestic growth rate, this agreement on free trade contributes to the global
market. Thus, a free trade agreement generates a positive outcome for the member nations and
serves the global economies.
Although a regional economic integration generates wide range of benefits for the global
as well as member countries, yet it generates disadvantages for the same. This leads to trade
diversion among the member economies. This is because the treaty on integration is signed
among nations that are relatively small and are new to the concept of trade and investments. This
diverges the access of products from non-member efficient exporters to the less efficient member
exporters (Dhingra & Sampson, 2016). Thus, the efficient producer from the world economies
suffers a loss due to high external tariffs of the integration. As a result, there is trade distortion in
the global market. Due to trade diversion, the consumers are burdened with higher costs of

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products (Yang & Martinez-Zarzoso, 2014). This is because the lower amounts of trade from
within the integration agreement transmits the consumers from less expensive markets to highly
expensive markets.
Apart from the trade diversion, the smaller economies are exposed to investment
diversion. Due to the smaller size and relatively weak market of these economies, they fail to
attract large amount of international investments. It is claimed to be one of the dominant
economic disadvantage of the agreement of regional economic integrations. The lower growth
rates does not attract the foreign investors and restricts from investing in these nations. As a
result, the business sector gets demotivated due to lower capital inflows. This hampers the rate of
productivity in the economy that is channelized to the GDP growth (Tan & Tang, 2016).
Moreover, the producers residing outside the region and is currently shifting the production
inside the region had to face higher cost of production. This increase in production costs leads to
increase in profits for the producers but reduces consumers’ welfare with higher prices.
The regional economic integration ASEAN is the basis of this concerned research topic.
Although this economic integration has faced various positive rates of growth and international
cash inflows, yet there are major drawbacks from the political influence (Das et al., 2013).
During the time of 1967, the cold war among the neighboring countries has negatively affected
the growth of this association. Moreover, during the financial crisis of 1997 there was a negative
thought among the AFTA (Asian Free Trade Agreement) that induced them to eliminate the all
tariffs. It took much time for the regional integration to open. However, soon after the financial
crisis the association opened its economic operations. In spite of the strong performance of the
economic association, the growth rate of this association took a gradual slowdown. This was
because of the lack in cooperation among the nations residing in the economic region. This even

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led to non-economic activity in the area. The unresolved issues of territorial disputes and the
vulnerability in the export sector generates threats in the path of development of ASEAN.
Moreover, the ineffective cooperative policies among the countries of the ASEAN are a major
laidback to the associations’ growth (Pomfret, 2013). ASEAN is subject to trade diversion and
had to face high risk from this diversion. Moreover, the non-trade barriers possess obstacles in
the path of free trade (Chia, 2014).
2.3 Success of the Association of Southeast Asian Nations (ASEAN)
ASEAN is a regional economic organization that comprises of ten Southeast Asian states
that promotes both governmental integration and supports economic collaboration among the
member countries. It was formulated in 8th August in 1967 with the member nation such as
Indonesia, Malaysia, Singapore, Philippines and Thailand. Over the years, there is an increase in
the number of member nations. This includes Brunei, Cambodia, Myanmar, Laos and Vietnam
(Nikomborirak & Jitdumrong, 2013). The principle aim of this regional integration includes the
rapid economic growth, social welfare of the community and the evolution of socio-cultural ties
amid its member countries. This helps in increasing the cultural ties, regional balances and
peaceful resolving of the differences. Although the area of land and the size of the population is
low, yet their contribution to the world GDP is very high. About $8.8 trillion of nominal GDP
growth was recorded in the year of 2015 (Heidari, Katircioğlu & Saeidpour, 2015). It is claimed
that ASEAN could be the sixth largest economy of the world, if this were a single economic
entity.
Once japan was known to have comparative advantage in the production of labor-
intensive products. This helped the country in generating low cost of production and higher
levels of profit. However, due to some negative externalities it started losing its comparative

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advantage in the production of goods where the intensity of labor employed is high. During this
era, the ASEAN countries like South Korea, Taiwan, Hong Kong and Singapore provided high
rates of sub-contracting labor force to Japan producers (Secretariat, 2014). These increasing
exports to japan has helped generating international reserves in this economic region. These
Asian nations, located within the region of the economic integration, are said to have a high
comparative advantage in labor-intensive products (Shohibul, 2013). Moreover, these nations are
endowed with high quality of labor force that has added to the economic growth of this
association. Apart from contributing to growth, the government of these nations has implemented
the cash inflows into creating a strong industrial base of this region. Apart from the endowment
of high quality labor force, these nations are blessed with appropriate geographical location. This
is another source of comparative advantage for the regional economic association. This
supportive geographical location added to the welfare of these nations. The nations are situated
closed to one another that helped them in reducing the transportation cost. These countries are
well-connected with the ports that has supported in increasing the export of these integration.
Singapore is known to build an empire with its huge amount of exports through the waterways.
In addition to these benefits, the reduction in tariffs has injected competitiveness among the
nations. Formation of this free tariff area has created trade and boosted the exporting sector of
the economy (Yang & Martinez-Zarzoso, 2014).
Over the decade, ASEAN has transformed from an economic integration into an
important economic player in the Asian region. Since a long time the internal markets of this
association have become an attractive investing zone for the super powers of the world economy
(Ahmad et al., 2014). By the year of 2015, the contribution of export to GDP growth has
increased to 66 percent. Among the capital exporting regions, ASEAN attracts huge volumes of

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Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI) in the exporting sector
of the association (Nimtrakoon, 2015). The figures of this FDI and FPI ranges to 30 percent and
65 percent respectively. AFTA’s principle objective is to gather the entire ASEAN market
together. This mainly consists of a wide range of merchandise products. The infrastructural
development of the member countries has improved to a greater level. This has attracted foreign
investments in the region and has transformed the market of this association to a production hub
in the global market. The greater investments has proven to develop this region.
2.4 Research Gap
Several researches have been performed on the topic of regional economic integration
like ASEAN, EU and many others. Researches have pointed out on the benefits of economic
integration and their contribution to the growth of those regions. Apart from this, several other
researchers have concentrated on the success story of the ASEAN. Moreover, many researches
have been evaluated based on the challenges faced by these integrations and their performance
rate during scarcity. All the researches are analyzed using various economic principle and
models to support the assumptions of the research topics. However, all these studies on regional
integrations of economies fails to identify the strategies that can be constructed to safeguard the
financial growth of the regions. Researches fails to recommend plausible policies and plans that
can be adapted to overcome the situation of negative economic downturn. This paper not only
includes the various benefits drawbacks and challenges faced by ASEAN, it also incorporates
and recommends strategies that can be adopted to overcome the negative outcomes. Researcher
has pointed out the case study of ASEAN to formulate potential plans that can help improve the
performance of the member nations in an economic integration.

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CHAPTER 3: METHODLOGY
This section of the research paper consists of the different measures that are addressed to
generate the results of the research questions tabulated in the study. A research methodology
enlists the various assumptions, strategies, and methods that can be used to estimate the outcome
of the paper (Kumar, 2019). Collecting data from different sources to support the findings
requires logical actions and evaluations to meet the objectives of the research. Thus, there is a
need for a proper illustration of the methodology section. This aspect consists of the research
philosophy, research method, purpose of the research, research design, research plan, method for
collecting data, data sampling, data analysis process and ethical consideration for the analysis.
Moreover, this section of the study highlights the idea of the researcher to carry forward the
analysis of the study.
3.1 Research Philosophy
A research methodology begins with incorporating the research philosophy. This sub-set
of a methodology presents the way through which data is collected, examined and estimated for
generating the outcome of the research. The characteristics and basis of the research idea
determine the research philosophy. Interpretivism, realism, positivism, and pragmatism are the
most commonly applied research philosophies. Interpretivism philosophy helps the researcher to
use analytical and interpretivism skills to conduct a subjective analysis of a study, whereas,
realism refers to reality or is independent of conceptual schemes. However, positivism in
philosophy permits the researcher to apply scientific tools or statistical methods to perform the
research analysis (Aliyu et al., 2014). Contrary to this, pragmatism in philosophy implies the

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application of qualitative and quantitative methods (Russill, 2016). Under this research
philosophy, researchers are able to use both the methods together.
The case study on ASEAN implements the research philosophy of interpretivism. The
researcher uses this philosophy to identify the challenges and potentials of economic integration.
The other mentioned research philosophies are irrelevant for conducting the study on ASEAN.
As positivism, realism and pragmatism cannot be implemented o conduct a research study on the
performance of ASEAN. Thus, interpretivism is the appropriate philosophy for this study.
3.2 Research Approach
The research approach is a procedure that presents the path of the research, which is
based on the objectives of the study. The research approach is divided into three major types that
include inductive, deductive and abductive approaches (Johnston, 2014). In inductive research,
the questions are formulated to focus on the aim of the study that enables the researcher to
concentrate on the unexplored part of the research. Whereas, the abductive approach
concentrates on specific facts and puzzles that help the researcher to find the goal. On the other
hand, the deductive approach is based on traditional and established models that enable to
analyze the hypothesis of the study.
In this study, the deductive approach is applied to enable the researcher to use established
theories to evaluate the outcome of the analysis. This approach will contribute to explore the
study in a different way and will prepare questions to find the answer to the study (Snead &
Wright, 2014). This will help in analyzing the challenges and will develop strategies against the
hurdles in the growth of ASEAN, whereas, abductive and inductive approaches are not selected
for evaluating the concerned study. The reason behind this is that there is no need for subjective
knowledge exploration for designing plans to develop ASEAN and overcome its challenges.

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Neither there is a requirement for evaluating puzzles and critical facts to scrutinize unexplored
part of the case study.
3.3 Research Purpose
The purpose of the research is designed to identify the specific objective of the study. The
objective of the study means the identification of the relevant situations or evaluating the relation
amid the research variables. There are mainly two fundamental types of research purposes, one is
explanatory and the other is exploratory. The explanatory research is conducted to enable the
researcher to elaborate on the casual association amid the research components to direct the
researcher towards the phenomenon and the specific events. The testing of the hypothesis is used
to evaluate outcomes in this kind of research (Newton & Burgess, 2016). In contrast to this, the
exploratory research enables the researcher to perform the analysis from a different angle that
adds a new perspective to the subject. In addition to this, it supports the subject to develop by
exploring a new concept of the subject.
To analyze the results of the case study on the regional economic integration ASEAN, the
explanatory research purpose is implemented. This will assist the researcher to find the results of
the listed research questions on preparing strategies against the challenges faced by ASEAN.
This is performed by evaluating the research modules with the specific events of the ASEAN.
Moreover, this research purpose helps in elaborating the events and later connects with the
assumptions. Thus, the exploratory research purpose is not selected for analyzing the outcome of
ASEAN.

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3.4 Research Design
Research design implies the various stages and methods incorporated by the researcher to
formulate the study. This ranges from the collection of data to the estimation techniques applied
to find the outcome (Walliman, 2017). There are several types of research designs available to
conduct the study. This consists of correlational, experimental, descriptive, quasi-experimental
and many others. Concerned research implements a descriptive research design (Rahi, 2017).
Under this design, researchers are able to describe the phenomena and the causal association
among the various factors of economic integration. Moreover, when using the exploratory
research purpose, it is appropriate to use descriptive design as it supports to elaborate
theoretically the associated fact of the subject (Colorafi & Evans, 2016). In addition to this, the
design helps researches to gather data and facts for analyzing the factors using new concepts and
theories. Together with this, it relates the theories with the facts gathered from the analysis of
ASEAN. Moreover, it is difficult to scrutinize data of ASAN thus applying descriptive design is
appropriate.
3.5 Research Strategy
Research strategy implies the simple way by which a researcher collects data from
different sources and evaluates the outcome of the questions prescribed in the study. Some major
and commonly used research strategies are the interview method survey, case study, archive,
action research, narrative inquiry, and grounded theory. The case study method of the research
strategy is an appropriate technique for studying the economic integration of ASEAN. This
research strategy limits the need for collecting data and enables the researcher to study the
context on the basis of some theories and concepts. This even allows the user to make
assumptions in designing the research and evaluating the outcome. Normally, a case study

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strategy is used to evaluate the outcomes of real-world cases. Moreover, this helps in gathering
knowledge and recommending ideas that are relevant to practical life (Hancock & Algozzine,
2016). The research on benefits, drawbacks, challenges and developmental strategies for ASEAN
requires a descriptive and theoretical explanation. Thus, there is a requirement for the case study
strategy to build the research topic logically and find the outcome.
3.6 Method for Collection of Data
The data collection method refers to the basic way by which a researcher gathers data
from different sources to analyze the result of the research questions (Sekaran & Bougie, 2016).
There are mainly two types of data, primary data, and secondary data. Primary data is collected
directly from the area of study and is suitable for smaller populations or samples. The collection
method includes interviews through the questionnaire, surveys, observation, feedback of
individuals and many others. On the other hand, secondary data is collected from secondary
sources or indirectly through some medium such as books, websites, journals, articles, company
balance sheets, government reports, and articles. This are useful when the population or the
sample size is huge (Johnston, 2017).
For researching the questions mentioned for ASEAN, it is appropriate for the researcher
to use secondary data collection method. Performing a study on the performance and
contribution of ASEAN consists of a huge sample size. Thus, primary data collection is
irrelevant. The data for analyzing the performance and global contribution of ASEAN was
collected from various government sites and official website of ASEAN. The comparison
between previous and current strategies of ASEAN is collected from renowned articles and
journals. Moreover, to draw down the answers for the questions it is required to evaluate
economic theoretical examples.

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3.7 Data Analysis Method
To assess the outcome of the research topic the researcher used qualitative secondary data
and descriptive method. It is the method by which qualitative data is collected from journals of
renowned authors and is applied to find the outcome of a different research topic (Silverman,
2016). When it is difficult to perform primary data analysis because of the large size of the
population, secondary analysis of data through qualitative method helps in maximizing the
outcome (Mayer, 2015). This data can be used to prepare graphical representations to possess
visual outcomes.
3.8 Ethical Consideration
Ethical consideration implies the validity and morality of the research. To be precise it
refers to the reliability in the examination of data and maintaining the confidentiality and laws of
the university. The paper should incorporate the appropriateness of the outcome without
violating the guidelines and privacy of any institution. A researcher faces several difficulties in
performing a research analysis such as the violation of laws, plagiarism, patent theft and data
manipulation. Violation of this is subject to restriction in performing research (Kosinski et al.,
2015). Thus, a researcher should avoid such non-ethical issues for presenting a swift study. This
could be avoided by providing credit to the authors of the mentioned theories and by presenting
their own thoughts (McKee, 2013).

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CHAPTER 4: DATA ANALYSIS AND FINDINGS
This chapter presents an overview of the findings, obtained from the analysis of the
secondary information on ASEAN and its different aspects, success, growth and different
challenges faced by the region. The nature of the research topic is qualitative and exploratory,
hence, secondary information on the above-mentioned aspects were collected from different
journals, official websites, and different government and newspaper publications. For the data
analysis, qualitative descriptive method was followed as the research topic did not adhere to
primary data and quantitative analysis. Thus, an extensive exploratory study was conducted on
the secondary data by applying qualitative descriptive method. The findings and interpretation
are as followed.
4.1 Findings
4.1.1 GDP and economic growth
ASEAN was formed with the objective of achieving growth and development of 10
Southeast Asian countries. Over the years, this region has experienced significant growth, which
indicates that the economies have been performing in a better manner with increased trade flow,
increased production, and increased stock of different types of resources. Among all the member
states, Indonesia has experienced the major growth in the past 10 years, followed by Thailand,
Malaysia, Singapore and Philippines. The least performing nations are Laos and Brunei
(Asean.org, 2019).

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Figure 1: Gross domestic product (GDP) of the ASEAN nations, 2008 - 2018 (in billion U.S.
dollars)
(Source: Statista.com, 2019)
In 2018, the total GDP of all the ASEAN countries was around USD 2.92 trillion, which
marked significant growth than the previous years. In the past few years, the ASEAN economies
have displayed thriving growth in comparison to the growth of the global market. The above
figure shows the country wise breakdown of ASEAN’s total GDP from 2008-2018, which
indicates wide diversity in the economic growth of the nations.
As found from the aseanstats.org report (2018), the regional economic integration in
ASEAN has been quite successful in terms of economic growth. With USD 2.8 trillion of
combined GDP in 2017, the ASEAN collectively holds the 5th rank among the largest economies
of the world and 3rd among all the Asian countries. While in 2000, the GDP of ASEAN was USD

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615 billion, in 2018, it was able to earn more than 4.5 times of the value, amounting to USD 2.92
trillion. The trend in GDP per capita followed the GDP trend closely
Figure 2: Total values and per capita ASEAN GDP, 2000-2017
(Source: Aseanstats.org, 2018)
The real GDP of ASEAN was also positive during 2007-2017. The REI was successful in
recovering from the economic crisis of Asia in 1998-1999 and achieved a growth rate of 6% in
2000. It continued to grow with a yearly average of 5.3% until 2017 (Aseanstats.org, 2018).

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Figure 3: GDP growth rate (%), ASEAN Member States, 2000-2017
(Source: Aseanstats.org, 2018)
The breakdown of GDP in three primary economic sectors, that is, agriculture,
manufacturing and services, overtime indicated the structural change of the countries and over
the years from 2005 to 2017, it is found that the structural composition in GDP of ASEAN
remained almost same, with agriculture contributing lowest, around 10-12%, manufacturing
contributing around 36-39% and services contributing highest, 46-50% (Aseanstats.org, 2018).
Figure 4: ASEAN total GDP share by main economic sectors (%), 2005-2017

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(Source: Aseanstats.org, 2018)
It can be said that while the share of agriculture and manufacturing declined slightly over
the years under consideration, the share of services increased. Thus, the service sectors of the
ASEAN countries have been growing steadily. The following image shows the country wise
breakup of the sectors and it helps to understand the sectoral growth of different countries under
ASEAN.
Figure 5: ASEAN Member States GDP share by main economic sectors (%), 2005-2017
(Source: Aseanstats.org, 2018)
It is evident that the service sector contributed maximum (67.1%) in Singapore while the
share is lowest in Brunei (37.9%). At the same time, Singapore has zero contribution from the
agriculture sector while its share is highest in Brunei. It can be interpreted from the above data
that while Brunei is an agricultural economy, the economy of Singapore is mostly dependent on
the service and manufacturing industry. The other members of ASEAN also have a growing
manufacturing sector, which have been contributing significantly in the GDP of ASEAN.

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4.1.2 Trade and investment
The primary objective of economic integration lies in increase in the free flow of trade of
goods, services, investment and other resources. ASEAN is no exception. After the formation
and expansion of the ASEAN, the opportunity of trade and investment of the countries increased
and became quite easier. Thus, in the last decade, the region experienced a significant increase in
exports and imports of goods and services.
It has been observed that within the period 2000-2017, the global trade in merchandise
and the FDI in ASEAN, which are crucial components of the economy of any region, have
shown significant increase. The total value of the merchandized trade amounted to almost USD
2.6 trillion, and the trade in services amounted to USD 703.2 billion in 2017. The level of FDI
amounted to around USD 135.6 billion (Aseanstats.org, 2018). As seen from the graph below,
the rate of growth of exports and imports has sharply increased, except for the years of global
financial crisis. However, the imports and exports have increased at almost same rate.
Figure 6: Value of exports and imports of goods and trade balance (US$ billion), ASEAN
total, 2000-2017

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(Source: Aseanstats.org, 2018)
Regarding the international trade in merchandise, the total trade has remarkably increased
from USD 790 billion in 2000 to USD 257 billion in 2017. It indicates a growth of almost 3.5
times. The trend in trade balance has always been positive.
Figure 7: Values of exports and imports of services and trade balance (US$ billion),
ASEAN total, 2005-2017
(Source: Aseanstats.org, 2018)
Although, the ASEAN countries experienced positive trade surplus in case of products, it
experienced a negative balance, that is, trade deficit for quite a long time during 2005-2017. The
trade deficit has been experienced for 2005-2015, however, it became positive in 2016 and 2017,
indicating a rise in the export of services from ASEAN.
The level of intra and extra FDI has also increased significantly due to the establishment
of economic integration of the Southeast Asian region, which helped in its growth. Over the
years from 2000 to 2017, the total FDI increased except in 2008-09, when the FDI dropped by

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about 50% due to the global financial crisis. It received the highest investment in 2017, with
USD 27 billion from intra-ASEAN and USD 108.6 billion from the extra-ASEAN countries
(asean.org, 2019).
Figure 8: Inward flows of foreign direct investment, intra and extra-ASEAN (USD billion),
2000-2017
(Source: Aseanstats.org, 2018)
Figure 9: Share of ASEAN top 5 foreign direct investment sources (%), 2000, 2010 and
2017
(Source: Aseanstats.org, 2018)

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There have been changes in the sources of FDI for ASEAN. According to Aseanstats.org
(2018), in 2000, the maximum FDI came from EU (42.2%), followed by USA (31.7%). In the
next 10 years, the sources have changed, the contribution of EU had reduced to 19.5%, and that
of USA also reduced to 12.6%, while the share of ASEAN increased to 15.1% from 5.6% in
2000, Japan’s share increased from 4.4% in 2000 to 12% in 2010. Apart from these, the
contribution from other countries all together increased significantly, 11.9% in 2000 to 36.7% in
2010. In 2017, it is seen that the share of ASEAN has become highest in FDI contribution,
19.9%, while that of EU had reduced to 18.3%. However, Japan’s share of FDI has reduced to
9.9%, while that of China has increased to 8.4%. At the same time, FDI from other regions still
remained highest to 37.8%. This indicates that the ASEAN has grown significantly during this
period, which reduced EU’s contribution in FDI to this region (Oecd.org, 2019).
4.2 Issues in ASEAN
Thus, from the above discussion, it can be said that the regional economic integration has
improved the economic condition of all the member states of ASEAN. Over the years, the region
has experienced growth and development in terms of production, international trade of goods,
services and resources, and inflow and outflow of investment, which made ASEAN the 5th
largest collective economy of the world. However, as the growth has been achieved in the
member countries of ASEAN, several other challenges have also been observed. Firstly, there
are differences in the level of growth in each country. In other words, there is wide diversity in
and inequality in the growth and development among the countries. As seen from the graphs on
the GDP and growth rate, it has been observed that over the past decade, some of the countries
have achieved exceptional growth, such as, Indonesia, Malaysia, Thailand, Philippines and
Singapore. On the other hand, some countries, such as, Brunei and Laos, did not achieve much

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increase in their production and hence, their contribution in the GDP growth has been extremely
less. These countries lack adequate resources to achieve sufficient growth by utilizing the inflow
of FDI. These countries also lack adequate infrastructure to incorporate the growth opportunities.
According to a report by Thomas (2019), the growth of ASEAN has been slower than
expected in the first half of 2019. As per the recent data from the Asian Development Bank
(ADB), the Southeast Asian region achieved growth, which is less than expected, and it pushed
down the forecasts for growth to 4.8% in 2019 and 4.9% in 2020. The regional inflation is also
expected to decline from the earlier expectation of 2.6% to 2.4%. It has been observed that the
region is facing threats from the on-going US-China trade war and a fall in the electronics cycle.
According to the forecast by ADB, the Philippines, Singapore, and Thailand would see a cut in
their GDP growth due to the impact of the US-China trade war.
Some of the key challenges of ASEAN are highlighted by Mahmood (2018). Those are as
explained below:
 Firstly, the regional relationships and geopolitical stability is often challenged as the
countries are getting engaged in territorial disputes for increasing their power. For
example, the territories in the South China Sea are matter of disputes among China,
Malaysia, Vietnam, Philippines and Brunei.
 Secondly, there are challenges for governance of businesses as the region contains
numerous types of business. The interests of the large conglomerates, lack of
transparency and widespread corruptions are affecting the environment of business in the
region, especially the small organizations.

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 Thirdly, the new businesses in the region face tough competition from the foreign rivals
but there is lack of regulatory support from the governments for fostering
entrepreneurship and creativity to meet the highly demanding customers through a scope
of avoiding the cost burden of the potential failure.
 Fourthly, the changing demographics require enhanced education and training to get
equipped to meet the changing demands of the region. The level of immigration is also
high which adds pressure to the production level and job markets. Along with that, the
issues like, lack of affordable housing, low cost healthcare and lack of educational
opportunities are also affecting the quality of demographics of the region, which is one of
the major resources required for higher growth.
 Fifthly, the wide diversity in income among the member countries create differences in
growth and that requires strategic planning, large infrastructural development, and
financial investments to address the differences in the growth level.
 Lastly, the level of technology adoption is found to be highly different among the
members and thus, the level of technological integration across the region gets affected.
As explored and evaluated by Yates (2019), in the post-cold war era, the ASEAN region had
faced challenges in inter-regional instability. In the 1990s, ASEAN faced an environment for
complex regional security. The entire East Asian region benefitted from the growth of the
economy of China, however, it also brought regional uncertainties, especially in the context of
the areas of South China Sea. This uncertainty still exists, affecting the regional stability of
ASEAN.
The image of confidence of ASEAN was affected since the mid 1997 due to the currency
stability issues of many member nations, especially Thailand. However, the long term prospects

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of the sustainable growth remained favorable, which influenced the investors to increase
investments. For maximizing the gains, which can be realized from the economic relations
within the own region of ASEAN, it has been pursuing the introduction of the ASEAN Free
Trade Area (AFTA) (Akhmadi, 2017).
The internal cohesion of ASEAN was affected initially by the issues of leadership
transition and also due to the conflicts in Cambodia. However, during the enlargement process of
the collaboration of the countries, the method of ‘constructive intervention’ was applied.
4.3 Challenges that need to be addressed by ASEAN
Accessibility to a dependable and affordable infrastructure is a growing need of any
economy. This contributes to creating employment and maintain sustainable long-run growth.
However, there is a slowdown in the economic performance and structural development of
ASEAN. As per the records of the World Bank for the region of East Asia and the Pacific, the
infrastructure of the ASEAN is projected to move to USD $3.4 trillion between the era of 2013
and 2030 (theaseanpost.com, 2016). Due to its sudden fall in the anticipated growth rate, this
economic region is facing difficulty in maintaining stable growth rates. ASEAN’s infrastructural
development requires the USD $3.4 trillion amounts to cope up with its gradual slowdown. In
addition to this, there is high requirement for dealing with the growing levels of poverty and high
disparity in income distribution. Current records suggest that the present expenditure on
infrastructural development in this region is beyond low. This low infrastructural spending can
lead to stagnation in the region by the year of 2030.
To overcome the situation of low spending and to achieve the $3.4 trillion milestone the
government should revise its objectives. To meet the milestone of anticipated infrastructural

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development there is a need to formulate fresh sets of policies, increase administrative
regulation, stabilize finances and improve market conditions. In addition to this, the government
should support the planning and growth of new commercial projects. As per records, the
government is improvising its strategies and policies to achieve the desired goal of the region.
Recently, the World Bank Group are raising their efforts to support markets in this region. They
are arranging private funds through different packages to stabilize the market conditions.
Additionally, they are safeguarding the economies against risks and establishing guidance to
improvise the market.
Apart from the low volumes of spending in infrastructure development of ASEAN, the
wide variations in the global financial market is threatening the inflows in this region. The
effective monetary policies and the faster pace of development in the developed economies is
diverging the path of sharp capital inflows. These advance economies, specifically consists of the
United States of America and the European economic Zone, are attracting huge volumes of
international capital inflows leaving behind the Southeast region (Katada, 2013). These
economies are not only reversing the direction of capital inflows but also generating currency
depreciation and shifts. As a result, it is being anticipated that this behavioral change can
adversely affect the growing economies. This can increase the debt burden of the regions. It is
extensively necessary to take care of the growing threats generated from the global financial
crisis put forwarded by the advanced nations. Loss in capital inflows indicates loss in growth and
developmental needs. Whenever there is fall in investments, it directly affects the business
sector. Thus, the administration should provide greater focus on the creation of capitals and
increase in foreign inflows. Australia is a major contributor to the sustainable and flourishing
growth aspects of the ASEAN region (Aph.gov.au., 2019). It is a major economic partner of the

39RESEARCH PAPER
ASEAN. Whether in terms of investments or in terms of export revenue Australia has devoted lot
more to this economic region. Since a long time Australia has continuously tried to be a part of
the prosperous integration of ASEAN. It has paid uninterrupted attention towards the economic,
developmental and growth prospects of ASEAN. Australia has been acting as an active
participant in this regional forum (Gulagi et al., 2017). Despite of its continuous attendance in
the prosperity of ASEAN, it fails to succeed in gaining the membership of ASEAN’s newest
dialogue focus. However, the government should look forward to build this relationship, as this
will continue to bring benefits for the entire region.
ASEAN has faced major issues from its strategy of enlarging the economic region.
Countries like Vietnam, Laos and Burma are the reasons behind the lag in the growth of this
economic region. Vietnam is bounded by strict regulations of its government. Business in this
sector is subject strict guidelines prescribed the government of Vietnam (Renshaw, 2013). The
strictness of the country makes it difficult for business to prosper. Trade in this country is not
flexible, thus the foreign economies are irked by this strict rules. Moreover, this restricts capital
inflows into the country. As a result, the entire region suffers a laid back possessed by this
nation. Laos is known to be one of the less populated country of ASEAN (Pomfret, 2013).
Moreover, it is termed as the poorest of all. As a result, the efficiency in productivity offered by
this nation and the contribution to ASEAN GDP is less. Apart from its impact on the economic
region, the country itself is affected by the high membership cost. Laotian government is worried
about the increasing debt levels of the country. After these two nations, Burma joins the queue.
Burma is known to be an isolated, poor and instable country. This is feared to affect the overall
performance of the economic region. Moreover, these increasing expansion plans of the region
can lead to bitter relationships with the major external partner that includes the US and the EU

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(Gerard, 2013). Since a long time ASEAN is facing wide discrepancy in GDP growth. There is a
division between rich countries and the poorer one. ASEAN consists of these drastic ranges of
income variability. However, over the years it has been noted that the government of Vietnam is
taking steps to increase investment in the country. The government is interested in expanding the
business domain. It is accepting as well as adopting innovative technology into its productivity
chains. Following this, the Laotian government is also grabbing the idea of increasing efficiency.
If all this goes well ASEAN can improve its economic performance and achieve its desired level,
without harming the sentiments of its external partners.
In spite of several drawbacks and challenges of the regional economic integration
ASEAN, it is difficult to eliminate its unprecedented and prosperous success. However, if the
association dreams of achieving the target of its prosperity prior to the year of 2030 it should
definitely buckle up the areas of faults. Moreover, it is extensively necessary for the members of
the region to follow the enlisted requirements that can take the region’s growth prospect to a
different level.

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CHAPTER 5: CONCLUSION AND RECOMMENDATIONS
This chapter is the last chapter of the research study that presents the concluding remarks
on the research topic and also provides some potential solutions to the study topic. In this
chapter, the researcher creates an association between the objectives of the research and the
findings to evaluate whether the research objectives have been fulfilled in an effective manner.
Based on the findings, the researcher provides some recommendation on how to handle the
issues effectively. The study is based on a secondary qualitative research to find out the
challenges or issues of Regional Economic Integration, with a special focus on ASEAN, evaluate
those and compare those with performance of the region in the past decade to get an overview of
the economic growth and development of the region due to the integration. The concluding
remarks are as follows:
5.1 Linking to the objectives
5.1.1 Linking to the first objective
The first objective of the research was to discover the effectiveness of the regional
integration of ASEAN. In order to meet this research objective, the researcher examined the
performance of the combined economy over the past decade as well as since 2000. This new
millennium has consisted of rapid changes in the economy, which included boosts, such as, rapid
technological advancement, trade liberalization, increased inflow of capital and human
resources, employment creation opportunities, etc. as well as shocks, like the global financial
crisis in 2008-09, the political and social instability in various economic regions, affecting the
growth, and the US-China trade war. Thus, from studying the economic performance of ASEAN,
it has been found that the economic integration of the Southeast Asian countries has achieved

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significant success since 2000. There has been considerable growth in production, GDP per
capita, level of investment inflow and outflow, growth in services sector and increase in
international trade in the member countries of ASEAN. In the past two decades, the GDP of
ASEAN grew to USD 2.92 trillion from USD 615 billion in 2000. Thus, it can be stated that the
purpose of the REI of ASEAN has been achieved, that is, the member countries of ASEAN have
been able to successfully achieve the economic, political and social integration, reflected from
the creation and success of AFTA, AEC (ASEAN Economic Community) etc. and improved
relationships with the rest of the world.
5.1.2 Linking to the second objective
The second objective of the research was to investigate the challenges faced by ASEAN
member countries. Over the years ASEAN has proven to record a good growth in terms of
international trades, huge amount of foreign investments and productivity. However, the region
is subject to a number of challenges that created hurdles in the path of growth. There is wide
range of income disparities among the member states of the region. Countries like Singapore,
Thailand, Malaysia and Indonesia accounted outstanding rates of growth. Their infrastructural
development and productivity range are exceptionally high. As a result, the inflows from FDI
and FPI are extremely high. On the other hand, countries such as Laos, Vietnam, Burma and
Brunei could not cope with the rapid growth of the region. Their levels of growth are poorer
compared to that of the other member states. However, Vietnam is subject to strict government
regulations that adversely affects the business domain of the integration. As this countries are
less efficient in terms of export and productivity, they could not cope with the fast pace of
development. This resulted into low rates of infrastructural development and medium strength of
the market. These negative issues failed to attract foreign investments and hence the contribution

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of this region is less. Over the years, as per the Asian Development Bank (ADB) the ASEAN
region has recorded slower rates of growth. It is unable to achieve the anticipated amount of
growth.
Apart from the wide disparities in GDP growth, development and production. Growth in
this region is extensively affected by the US China trade-war and the recent slowdown of the
electronics market. The trade war between the two superpower of the world greatly affected the
export revenue of this region. Moreover, this association is affected by certain territorial
dysfunctions such as the South China Sea disputes amid China and some of the ASEAN member
states. The political corruption and the absence of transparency in management negatively affects
the developmental growth of this economic association. This stagnates the productivity growth
and business development in this region. Moreover, the faulty strategies of the government in
supporting the industrial sector has adverse impact on this region. In addition to this the
ineffective regulatory policies of the government hampers the strength and competitiveness of
the sectors business against the rivals. Despite of continuous improvement in the production
chain, the wide disparity in technology adoption has negative impact over the combined growth
of this economic integration. The increasing immigration has created a burden on the growth.
This possess pressure over the environmental factors and the job market of the region. These are
the major challenges and drawbacks of the ASEAN on its unprecedented growth.
5.2 Recommendations
The third objective of the study was to reflect on the potential solutions that can address
the challenges of ASEAN. Over the decade, this particular regional economic integration has
recorded potential growth in GDP as well as exporting sector. Despite of the strength and unique
growth record of the Association of Southeast Asian Nations (ASEAN), this region faces several

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issues from its lack of strategic planning. The faulty implementation of the regulative
governmental policies affects the growth of the business sector of ASEAN. Additionally, the
high level of corruption and improper strategy hampers the industrial development. The
variability in income and fail in the adoption of innovative technologies hampers the production
process. Thus, some recommendations are provided on the basis of the findings of the challenges
faced by the ASEAN countries. The administration should strengthen its base and adopt
transparent behavior in its operation. The political instability are a major concern that is
prevailing in this region. As a result, there is a requirement for controlling this growing
instability that is hampering the growth of this integration. Business and new startups require
governmental supports to build an empire. Thus, the government operating in this region should
provide finances to the newborn manufacturing firm to boost the overall growth. The high rates
of immigration are a threat to the process of development of this region. The administration
should take possible steps to control the growing population that are acting as virus in the labor
force. In addition to this, the government should audit its strategical plans and increase the
efficiency in implementation of the same. Moreover, it should pay keen attention towards equal
distribution of growth among all the member nations. The Government of Vietnam requires
loosening of its regulative authority to promote business in the nation. The relatively small
economies like Burma, Laos and Brunei needs financial support to establish its presence in the
market. Thus, there is a need for strong upper hand of the government to bring back the
economic region back on its former prosperous growth track and maintain its relation with the
US and the EU.

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5.3 Future scope of the study
From the above study, it can be said that the current research has produced an elaborate
overview of the research topic. However, due to time and budget limitation, only secondary data
was collected and only qualitative descriptive method was applied for the analysis process. The
study has delivered quite a few significant challenges and laid backs that affect the economic
performance of the ASEAN countries. It depicts a broad outlook with specific factors. Hence, the
future researchers can focus on specific aspects or issues and examine their impact on a specific
country. They can also perform a quantitative study using primary data. Thus, using a narrowed
down approach is beneficial to get more precise outlook towards the issues of ASEAN and REI
in general and address those effectively.

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